BlackBerry Ltd, on the block as its smartphone business struggles, is in talks with Cisco Systems, Google Inc and SAP about selling them all or parts of itself, several sources close to the matter said.

Such a deal would be an alternative to the preliminary agreement reached weeks ago with a group, led by BlackBerry’s biggest shareholder, Fairfax Financial Holdings, to take the company private for about US$4.7 billion, a bid which has faced some skepticism because of financing questions.

The company, based in Waterloo, Ontario, has asked for preliminary expressions of interest from potential strategic buyers, which also include Intel Corp and Asian companies LG and Samsung, by early next week.

It is unclear which parties will bid, if any. But the potential technology buyers have been especially interested in BlackBerry’s secure server network and patent portfolio, although doubts about the assets’ value remain an issue, the sources said.

Google, Intel, Cisco, LG and SAP declined to comment. Samsung was not immediately available for comment.

Possible bidders are proceeding with caution given the uncertainty around BlackBerry, which last month reported a quarterly loss of nearly US$1 billion after taking a writedown on unsold Z10 phones.

The value of BlackBerry’s patent portfolio and licensing agreements is likely to halve in the next 18 months, a company filing from this week shows, potentially limiting its attractiveness.

According to analysts, BlackBerry’s assets include a shrinking yet well-regarded services business that powers its security-focused messaging system, worth US$3 billion to $4.5 billion; a collection of patents that could be worth US$2 billion to $3 billion; and US$3.1 billion in cash and investments.

However, it’s likely to burn through almost $2 billion of its cash pile in the next year and a half, Bernstein analyst Pierre Ferragu wrote on Thursday after studying the filing.

SHAREHOLDER SEEKS CLASS ACTION SUIT

Adding to the company’s woes, a shareholder of BlackBerry is seeking a class action lawsuit against the company and its executives, accusing them of inflating the stock price by painting a misleadingly rosy picture of the business prospects of its BlackBerry 10 smartphone line.

BlackBerry misled investors last year by saying that the company was “progressing on its financial and operational commitments,” and that previews of its BlackBerry 10 platform were well received by developers, according to shareholder Marvin Pearlstein in a lawsuit lodged in Manhattan federal court Friday.

Pearlstein is seeking to represent a class of “thousands” of shareholders who bought stock between Sept. 27, 2012, when the company touted its strong financial position, and Sept. 20 of this year, when it revealed it would have to write down between US$930 million and US$960 million related to unsold BlackBerry 10 devices, according to the lawsuit.

“In reality, the BlackBerry 10 was not well-received by the market, and the company was forced to … lay off approximately 4,500 employees, totalling approximately 40% of its total workforce,” the complaint alleges.

In addition to BlackBerry, Chief Executive Thorsten Heins and Chief Financial Officer Brian Bidulka are named as defendants. A spokeswoman for BlackBerry declined to comment.

PRIVATE EQUITY SHOWS INTEREST

Private equity firms that have showed interest in BlackBerry – which also include Cerberus Capital Management – have a few weeks, as BlackBerry focuses on taking bids from industry peers, the sources said.

In August, the company said it was weighing its options, which could include an outright sale, after Reuters first reported BlackBerry’s board was warming up to the possibility of going private.

At that time, it formed a five-member special committee chaired by board director Timothy Dattels. Other members include Chairman Barbara Stymiest, Chief Executive Thorsten Heins, Richard Lynch and Bert Nordberg.

A spokesman for BlackBerry said in an emailed statement to Reuters: “The special committee, with the assistance of BlackBerry’s independent financial and legal advisors, is conducting a robust and thorough review of strategic alternatives.” He declined to provide further comment.

If Friday's gains are anything to go by, investors are champing at the bit

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our community guidelines for more information and details on how to adjust your email settings.